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Breakthrough Heat EnginesRadical Economics

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Cool Energy Intro

• Privately held, Based in Boulder, CO• Established 2006• Seven FTE, one contractor• $9M raised to date (revenues,

investors, grants, self)• 8 issued patents, 3 pending• Commercialization underway,

initial sales

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Initial 25kW Testing Results Compared

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Initial 25kW Testing Results (1/2 power)

Hot Temp (deg C)

Cold Temp (deg C)

Indicated Power (Watts mechanical)

Generator Electrical Output (Watts Electrical)

Inverter Electrical Output (Watts Electrical)

Thermal Input (Watts thermal)

Indicated Efficiency

Thermal to Electrical Efficiency (Generator)

238 10 9,738 6,750 6,290 29,199 33.35% 23.12%238 10 9,848 6,780 6,250 30,030 32.79% 22.58%238 10 9,708 6,810 6,200 30,191 32.16% 22.56%238 10 9,775 6,790 6,220 29,520 33.11% 23.00%315 10 9,993 8,230 7,560 26,441 37.79% 31.13%315 10 10,024 8,370 7,660 26,433 37.92% 31.66%315 10 9,650 7,940 7,260 23,970 40.26% 33.12%315 10 11,132 8,880 8,480 26,869 41.43% 33.05%310 10 10,494 8,350 7,990 26,076 40.24% 32.02%309 10 10,477 8,400 7,860 26,343 39.77% 31.89%

Outstanding Efficiencies at these temperatures!

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Industrial Waste Heat Opportunity

ThermoHeart Engine heat recovery:• CEI solution ~30% more efficient than

competition• Payback 1-5 years for best applications• Large established market ($53B by 2018, Markets&Markets)

20% - 50% of industrial energy is wasted up exhaust stacks = tens of millions of $$ wasted daily

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Waste Heat Recovery Channel #1Thermal Pollution Control Equipment

• $2B annual sales*, $500M potential WHR add-ons• EU and Japan best current markets• 10-12% market growth in Asia• Best ROI - 24/7 processes: chemical mfg, food

processing, refineries, kilns

*Environmental Business Journal, 2011

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Thermal Pollution Control WHR System

750º C1000 scfm

4x 25kWe ThermoHeart Engines

320º C1000 scfm

375º C1350 lpm

290º C1350 lpm

TherminolHTF Loop284 kWth

HeatRejection Radiator206kWth

AC or DCElectrical Load

78 kWe fromThermoHeart

1000 scfm Direct Fired Thermal Oxidizer

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Thermal Pollution Control Channel Development

Thermal Pollution Control Equipment Providers• Diedrich Manufacturing, Anguil, Epcon, MetPro

(CECO Group), Pro Environmental, Inc.• Working with Diedrich on 3 potential pilots• Have visited Epcon twice – now that 25kW solution

is in test will work to find pilot• License rights to sell and service CEI equipment to

channel partner• Long term, orders placed direct from channel

partner to CM partner*Environmental Business Journal, 2011

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Waste Heat Recovery Channel #2

• 1 Year payback @ 6000 hours/year

• >$2B annual market

• Live demo in 2013• 7% power boost• Does not reduce genset

performance• Simple exhaust hookup

Diesel & NG Genset Exhaust Gas

Thermo-Heart®Engine

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Waste Heat Recovery Channel #2

Diesel and NG Genset Market (500kW to 2MW)• 32,000 units sold 2011, 42% baseload, 18GW*• Resulting TAM for CEI: $2.4B annual• By 2018, 34 GW of baseload gensets sold**• Resulting TAM for CEI: $4.5B annual• Can work with other WHR for max output

*EGSA **Navigant

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ThermoHeart Engine Array on Genset

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Overall WHR Market Channels

Cool Energy Channel Markets

RemoteGeneration

WHR

IndustrialCustomers

DoD, RemoteCustomers

DoD, RemoteCustomers

3)Strategic PartnersOEM / Licensing

3)Strategic PartnersOEM / Licensing DealersDealers

1) End Users for Pilots1) End Users for Pilots

2) Energy Service Companies2) Energy Service Companies

• Key steps: pilot demonstrations, channel partners, licensing

Power GeneratorIntegrators

Power GeneratorIntegrators

. . . . . . .

Military WHRSolutions

Industrial WHR

Solutions

DistributedGeneration

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Cool Energy Business Model

Development Roadmap

• License to equipment channel partners

• Up to 15% partner royalty rate

• Capital-light by using contract manufacturing

• Working with Keller Technology as CM

• Exit in 2019, great investor IRR

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Customer Value – 25kW WHR

Simple Payback Elec Rate Payback IRR7000 hours/yr, $0.10/kWh 4.0 years (US) 25%7% loan $0.15/kWh 2.5 years (Calif) 40%NO SUBSIDIES $0.25/kWh 1.5 years (Italy) 67%or INCENTIVES! $0.35/kWh 1.0 years (genset) 100%

1752 2628 3504 4380 5256 6132 7008 7884 87600.0

5.0

10.0

15.0

Payback vs. Annual Operating Hours

Annual Operating Hours

Payb

ack

(yrs

) @

$0.1

5/kW

h

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Marketing and Sales

• Building sales pipeline:22 units - 2015, 50 - 2016, 300 - 2017

• Schneider Electric has 3kW engine on test• Active MOU and conditional PO with Schneider Electric• Sales & licensing agreement with Edisun• Proposals and quotes to

• Three coffee roasting companies• One thermal oxidizer suppliers• Biomass power project

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Technology & Deployment3kW ThermoHeart On 24/7 Test

2007 2008 2009 2010 2011

P0 - 50W<5% eff.

P1 - 350W10% eff.

P2 - 2,000 Watts16.5% eff. @ 230°C

In demo3x P3 - 3000W

22% eff @ 270°C

2012 2013 2014 2015

24/7Testingof 3kW

25kWDesign 25kW

Initial Testing

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25kW ThermoHeart Engine

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Cool Energy Team

• Dr. Sam C. Weaver – Chairman and Co-founder– Serial entrepreneur >40 years in materials and energy– Exits: Millen Mtls to Dyson, Nuclear Ceramics to Eagle-Picher

• Bill Gross – Board Member, Founder and CEO of Idealab– Founder of GNP Development & Knowledge Adventure – Founded Idealab in 1996: dozens of RE and tech startups

• Samuel P. Weaver – President/CEO and Co-founder– B.S., Engineering & Applied Science, Caltech– Engineering Lead: Network Photonics, InPhase Technologies– Director of Worldwide Sales, dBm Optics

• Brian Nuel – Director of Engineering– B.S., M.S. Mech. Eng., High Honors, UI, Urbana– Design of engines, medical devices, telecomm devices– Cummins, P&G, Medtronic, Zolo Technologies, LASP• Biz Dev/Sales – Nadeem Mirza, ex-GE Energy

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Financial OutlookLicensing Model = Great Margins, Investor Returns

Pilots LicensingFigures in $1,000 unless noted 2016 2017 2018 2019 2020

Cool Energy Headcount (FTE) 15 25 35 50 75ThermoHeart Revenue (Cool Energy) 2,300$ Cost of Goods Sold (2,740)$ Licensing Fees -$ Cool Energy Up-Front Licensing Revenues 100$ 750$ 2,000$ 6,000$ 12,000$ Cool Energy Production Royalties -$ 563$ 2,719$ 7,163$ 15,750$ Grant/Design Income 250$ 750$ 1,250$ 1,500$ 2,500$

Cool Energy Gross Income (90)$ 2,063$ 5,969$ 14,663$ 30,250$ RD&D Expenses (250)$ (750)$ (1,000)$ (1,500)$ (1,500)$ GS&A and Overhead (1,944)$ (1,266)$ (2,475)$ (5,486)$ (9,760)$ Marketing (100)$ (500)$ (1,000)$ (2,000)$ (3,000)$ Warranty expenses -$ (563)$ (2,175)$ (4,775)$

Total Revenues 2,650$ 2,063$ 5,969$ 14,663$ 30,250$ EBITDA (2,384)$ (453)$ 931$ 3,501$ 11,215$

Depreciation (19)$ (35)$ (82)$ (124)$ (186)$ EBIT (2,402)$ (488)$ 850$ 3,378$ 11,029$ Taxes -$ -$ -$ 41$ 3,925$

Net Margin -686.33% -23.68% 14.23% 22.76% 23.48%

Profit (Loss) (2,402)$ ($488) $850 $3,337 $7,104

Cash on Hand (EOY) $2,609 $1,505 $970 $1,851 $6,712

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Cool Energy Fundraising

$5M Raise Q1 2016• $600K bridge round currently open

• Engineer and ops hires – manage Keller ramp, value

engineering of design

• Biz Dev hire – close paid pilots & licensees

• Purchase hard tooling = rapid cost reduction

~$150,000 needed for tooling

• Prove design reliability with 24/7 testing

• Support Fortune 500 pilot

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Cool Energy Outlook

Opportunity, Positioning, & Resources• Experienced team & continuous progress• Customer sales & licensing on-going• 8 patents issued, 3 pending• $9M funded (Idealab, sales, grants, self)• >$3B near-term WHR market• >$50B worldwide market for roadmap apps• Strategic partner exit in 2018/2019

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ThermoHeart Engine Temps

• 10kW to 500kW• Gas temps 400 °F

to 1200 °F• Liquid temps to

800 °F

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Estimated Installed Cost Breakdown

1 engine 500 engines 500 engines

COGS $175,000 $67,000 $50,000

Labor $15,000 (500 hrs) $2,000 (120 hrs) $2,000 (120 hrs)

Shipping $5,000 $5,000 $5,000

Installation $5,500 $5,500 $5,000

Control System / Inverter

$15,000 $12,000 $10,000

BOS $17,500 $15,000 $13,500

Total $233,000 $106,500 $85,500

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Payback Scenarios

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Waste Heat RecoveryCustomer Value

Engine Peak Power 25kWSystem Cost/Watt $3.00Installed Cost $75,000Annual O&M $/kWh $0.013Financing Rate 7.00%Years of Operation 10

Levelized Cost of Electricity (LCOE)

Competitive with Grid ElectricityCapacity Factor is the ratio of the annual energy produced

to the maximum that the engine could generate if operating at max output 24/7/365 (100% capacity factor)

LCOE Analysis ($/kWh)

Annual Energy Produced (kWh)

Annual O&M costs

Annual Operational Savings $75,000

Capacity Factor

LCOE formula ($/kWh)

20% 43800 $569.40 $6,000.60 0.257$ 30% 65700 $854.10 $9,000.90 0.176$ 40% 87600 $1,138.80 $12,001.20 0.135$ 50% 109500 $1,423.50 $15,001.50 0.111$ 60% 131400 $1,708.20 $18,001.80 0.094$ 70% 153300 $1,992.90 $21,002.10 0.083$ 80% 175200 $2,277.60 $24,002.40 0.074$ 90% 197100 $2,562.30 $27,002.70 0.067$

100% 219000 $2,847.00 $30,003.00 0.062$

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US WHR Public Benefit PotentialSystems Under 100kWe

• 10 GW of capacity from top 30% of sites• 52 TWh annually @ 60% capacity factor• $7.8B in annual energy savings @ $0.15/kWh• 26 M tons CO2 annual emissions reductions• 135,000 tons SOx/NOx reduction

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Military WHR Applications“Unleash us from the tether of fuel.” – Gen James T Mattis, USMC, 2003 (DSB 2008-02-ESTF)• Gensets are military’s largest wartime fuel consumer (34%)• 125,000 gensets fielded; 2.1GW capacity; 10,000 new/yr• Gensets use 360 Mgal/year JP-8 during wartime• $15/gallon burdened fuel cost in theater• 2003 – 2007: >3000 casualties in fuel/water supply ops• Shipboard heat recovery also of interest

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Core Technology AdvancesThermoHeart® Engine• Low temperature Stirling engine

• Converts heat to electricity

• High-surface-area heat exchangers

• Non-metallic regenerator

• No circulating lubrication

• 3-year service interval (20,000 hours)

• Clean and very quiet

3kW Engine Specification• 3.0 kW design @ 300C

• 36” diameter x 45” L

• >20% efficient at 250C

• >22% efficient at 300C

• Nitrogen working gas

• Reliability testing underway now

• Higher-power designs in progress

Beta Prototype – 2000W16.7% measured efficiency @215C

Product Design – Cast Parts, Simpler Mechanism22.3% measured efficiency at 270°C

3100W peak output to date

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Thermal Conversion Efficiency25kW Engine Design Modeled

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Reliability and Manufacturing Planning

• Units run over 9000 hours, 24/7 reliability test stand• Total engine testing to date: >280 million cycles (6,390

hrs + 2,860 hrs = 9,250 hrs)• Measuring ring wear, piston wear• Tracking power/efficiency over time/cycles• Testing alternative (simpler) ring designs• Projected ring life – 16,000 hours, still improving• Exploring simpler manufacturing for regenerators,

pistons, rings• Working with 2 contract manufacturers

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Competitive Advantages• Better efficiency and value than ORC, TE• Medium target temps: 100C to 400C• Novel four-cycle thermo-mechanical

arrangement• Design minimizes mechanism parts, dead

volume, footprint, cost, noise, vibration• High-effectiveness internal heat exchangers

separate from process heat exchangers• Full separation of hot and cold engine spaces

for improved efficiency